9/11/2014 India'scoaldemandsupplygapisprojectedtowiden:IMaCSEconomicTimes

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Tags: IMACS | EnvironmentalIssue | CoalIndiaLimited | CoalIndia | coaldemand | CIL |
captivepowerplants | CAGR
India'scoaldemandsupplygapisprojectedtowiden:IMaCS
DebjoySengupta,ETBureau Feb14,2013,06.05PMIST
KOLKATA:IncreasingdemandofcoalincoalbasedpowerplantsinIndiaisestimatedtogrow7%annuallytolead
ademandsupplygapof266mtinFY2017,saidIMaCS,amultilinemanagementanddevelopmentconsultingfirm
inIndia.
Theimportcouldcompriseof35.5mtofcokingcoaland230mtofthermalcoal.Importdemandwouldbeprimarily
beaccountedforbypowerutilities(190mt),andsteel(36mt).AlthoughIndia'scoalneedswillcontinuetobe
largelymetdomestically,theshareofimportsindomesticdemandisforecasttoincreaseto27%inFY2017.
LowergrowthinIndia'sdomesticproductionvisavisdemand,lowerqualityofdomesticcoal,andinadequate
availabilityofdomesticcokingcoalhaveresultedinIndia'scoalimportsincreasingata5yearCAGRof16.2%to
101mtinFY2012.Importsaccountedforaround16%ofdomesticconsumptioninFY2012,ascomparedwith7.1%
inFY2003.India'scoaldemandhasincreasedata5yearCAGRof6.5%to635mtinFY2012.Demandis
dominatedbythepowersector,whichaccountsfor7072%oftotaldemand.Includingsteel(11%)andcement
(5%),threeindustriesaccountfor87%ofIndia'scoaldemand.
Coalbasedplantsaccountforaround5557%ofIndia'selectricitygenerationcapacity,however,theirsharein
powergenerationhasbeenhigherat67%.India'scoaldemandisforecasttoincreaseatanannualrateof7%to
981mtbyFY2017,accordingtoIMaCS.Outoftheforecastdemand,demandbypowerutilitiesisforecastat682mt
(5yearCAGRof8%),accountingfor70%offorecastdemand.
Includingforecastdemandof56mtbycaptivepowerplants(CPP),theprojecteddemandforpowersectoris
around75%oftotaldemand.Demandbythesteelsectorisforecastat67mt(5yearCAGRof8%),accountingfor
7%oftotaldemand.
India'scoalproductionhasincreasedata5yearcompoundaveragegrowthrate(CAGR)of4.6%to540million
tonnes(mt)inFY2012.Overthelastfewyears,theincreaseinproductionhascomealmostentirelyfromnon
cokingcoal.ProductionofcokingcoalhasincreasedatalowratemainlybecauseoflowerproductionbyCoalIndia
Limited(CIL).
RisingpriceshasensuredimprovedfinancialsforCILduringFY201012.Althoughcompetitionfromalternate
suppliersandimportsislikelytoincreaseconsiderablyoverthemediumterm,thedominantpositionofCILis
unlikelytobeimpacted.
Consistentlyincreasingdemandsupplygap,increasedproduction,steadyreductioninworkforce,andproductivity
improvementmeasuresarethefactorswhichmayhaveapositiveimpactonCIL'sprofitabilityonaconsolidated
basis.However,performancevariationsacrosssubsidiariesmaycontinue.
India'senergysupplyanddemandislikelytobedominatedbycoalformanydecadestocome,primarilybecauseof
itslowercostsandabundantavailability.Comparedwithlimitedoilandgasreserves,India'scoalresourcesand
reservesareenormous.Asaresult,evenunderawiderangeofscenarios,coalisexpectedtocontributebetween
44%and51%oftheIndia'senergysupplyby2035,comparedwith42%in2010.
Coalisexpectedtocontinuetobethemainsourceofelectricitygeneration,withitsshareincreasingfrom68%in
2010to68.6%in2035.CoalisexpectedtoremainIndia'smostcompetitivefuelchoiceforpowergenerationover
9/11/2014 India'scoaldemandsupplygapisprojectedtowiden:IMaCSEconomicTimes
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thenext23decades.
Inindustry,coalisexpectedtobeprimarilyusedinsteelandcementproduction,andisexpectedtobethemainfuel
used.Althoughworlddemandprospectsforcoalcouldincreasinglybedependentonclimatechangepolicies,such
factorscouldhavelessinfluenceindevelopingcountriessuchasIndia,whichcouldplaceahighervalueon
economicgrowthandsecurityofenergysupplythanonenvironmentalobjectives.Becauseofthelonglifeofcoal
firedpowerplants,andthehighercostofbuildingadvancedplants,alternateinfrastructurewillcomeintooperation
onlyverygradually.